Facebook Inc (NASDAQ:FB) Buy Button Is Worth a 10% Revenue Boost, $100 PT

Facebook Inc (NASDAQ) Mark Zuckerberg

Facebook Inc (NASDAQ:FB) is going to put a Buy button on its site at long last, and Wall Street is excited about the effect that the new feature could have on the firm’s sales over the next year. Robert Peck put a price target of $100 on the firm today and said that he could see the button boosting revenue by 10%.

Facebook Inc buy button

Mr. Peck says that his client should Buy shares in Facebook. He sees the value of the firm rising strongly in the years to come, and thinks that the Buy button could change the way that Facebook works with advertisers and get the firm more directly involved with those involved directly in e-commerce.

Facebook expands in e-commerce

Facebook began testing a buy button for some users in the US in the middle of last year. The firm allowed small and medium stores to add a buy button to their ads and news feed posts. On Wednesday afternoon the firm announced a bigger rollout of the option, a move that could propel it directly into the world of e-commerce.

“We think this new buy button could not only expand the activity of current retail/ecommerce advertisers but also open a new segment of advertisers that are more ‘direct response’ e-commerce companies,” Peck wrote in his report on the company.

Shopify announced a big expansion of the Buy button on Facebook in a blog post. The firm said that it was going to invite a variety of merchants to use the button. If a user clicks the button the item is added to their shopping basket right on Facebook. They will be able to complete the transaction if they have their payment details on file with the social network.

Facebook “Buy” earns 10% revenue bump

The “Buy” button could be worth an increase of between 8-10% in total Facebook revenue according to Mr. Peck. His calculation to get to that number was simple.

“If we assume the Buy Button ads can achieve a ~30% lift in “effective CPMs” and that 10-30% all impressions are ecommerce related, then we think that Facebook could see an incremental lift to revenues of 5-10%,” he said in his report on the firm.

When the Buy button was first introduced last year Janney Capital analyst Tony Wible said that the feature “has positive implications for advertising and e-commerce on FB, but we believe the bigger opportunity will be in Payments, as linking FB user payment information is a key step to help drive a payments solution off the FB platform.”

Facebook’s use of the buy button is another step in its grand strategy of keeping people away from other platforms. The more time that people spend in Facebook apps the better. In order to do that the firm needs to link its platform with more and more partners, a feat that will take some time to achieve.

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